Paytm Eyes HDFC Bank as Third Partner for Merchant Migration Amid RBI Directive

27 Mar 2024 , 02:04 PM

One97 Communications Ltd, the parent company of Paytm, is likely to onboard HDFC Bank as the third partner to migrate merchants on the Paytm platform, as per sources familiar with the matter.

These merchants, initially onboarded on the Paytm app as UPI merchants by Paytm Payments Bank Limited (PPBL), were directed by the Reserve Bank of India to cease banking services from March 15.

Axis Bank and Yes Bank are already operational partners on the Paytm platform, with an estimated 30 million merchants onboarded. Discussions are underway with Canara Bank and Kotak Mahindra Bank, with Canara Bank likely to join next week.

Paytm, HDFC Bank, Canara Bank, and Kotak Mahindra Bank declined to comment on the merchant acquisition business.

HDFC Bank and SBI are anticipated to go live this week as payment service provider (PSP) banks for Paytm’s UPI consumer business, which boasts approximately 90 million users.

Yes Bank and Axis Bank went live on the Paytm UPI platform on March 15. SBI and HDFC Bank are listed as in-progress on the NPCI website.

Yes Bank is tasked with migrating existing @paytm handles. Other banks will gradually take over these handles. Yes Bank has assumed responsibility for maintaining PPBL’s PSP banking services.

Seamless migration is crucial for UPI to function smoothly, given Paytm’s significant market share in UPI transactions.

The RBI allowed OCL merchants and UPI users to continue using their handles and QR codes post-March 15 to prevent payment disruptions.

While NPCI advocates multiple banks migrating merchant accounts to mitigate risks, commercial negotiations between Paytm and banks will determine partnerships. Compliance costs for KYC procedures may delay discussions.

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